Reconfiguring the Business

Reconfiguring the Business Israel Gat Senior Consultant Cutter Consortium

Agenda
Part I: A New Paradigm
Part II: The Agile Software Opportunity
Part III: A Chasm Between Executive and Employees
Part III: A Chasm Between R&D and the Business

The Classical Techno-Economic Paradigm a la Perez
A sequence of events characterizes each of the techno-economic cycles :
Major technological innovation introduces new infrastructure
The new infrastructure disrupts both industry and commerce (and very possibly society)
In good time the new infrastructure becomes a stabilizing force
The technology gets understood and harnessed
Confidence builds in the new order that evolves around the technology
Inertia becomes the legacy of successful innovation

Five Successive Technological Revolutions Source: Carlota Perez, Technological Revolutions and Financial Capital Revolution Name Country Initiation Year First The ‘Industrial Revolution’ Britain Arkwright’s mill 1771 Second Age of Steam and Railway Britain The Liverpool-Manchester railway 1829 Third Age of Steel, Electricity and Heavy Engineering USA and Germany The Carnegie Bessmer steel plant 1875 Fourth Age of Oil, the Automobile and Mass Production USA Ford Model-T 1908 Fifth Information/ Tele-communication USA The Intel Microprocessor 1971

Revisionist Techno-Economic Theory a la Hagel, Brown and Davison
The historical pattern itself has been disrupted:
Disruption followed by stabilization is no more the case
The pace of change in Information, Telecommunication and software is exponential
Uncertainty and instability are pervasive
Sustained periods of prolonged equilibrium are unlikely
Both business and social systems need to adapt on an on-going basis to turbulent changes
But, a company can now punch “above his weight class” through the global digital infrastructure
(*) Hagel, Brown and Davison, Shaping Strategy in a World of Constant Disruption, Harvard Business Review, October 2008

Agenda
Part IV: A Chasm Between R&D and the Business

Role of Software in Your Strategy
As software is malleable, it can respond exceptionally well to the exponential pace/change in the new paradigm:
As an end to itself
As embedded software
As part of a business process/initiative
The higher the embedded software content in a product is, the more malleable the whole product becomes:
Example: cellular phones
Chunking through Agile methods facilitates quick changes on a granular level at any phase of the product life cycle

Enormity of the Software Opportunity
Software is becoming pervasive:
3 billion mobile devices nowadays touch the Internet
[Joshua-Michele Ross, The Rise of the Social Nervous System ]
Software is quickly becoming the biggest component in many products in which it is embedded
Each of the aforementioned 3 billion mobile devices probably contains about 1 million lines of code
Alignment of velocities: IT Operations is becoming ultra-fast
Flickr updates its servers every 30 minutes
[Kent Beck, Trends in Agile Development ]
IMVU updates its servers every 9 minutes
[InfoQ: Beyond Continuous Integration: Continuous Deployment ]
© Copyright 2009 Israel Gat

Relentless Software Innovation Through Agile Methods
Many kinds of innovation
Disruptive innovation
Product innovation
Platform innovation
Value engineering innovation
Process innovation
Business model innovation
Line extension innovation
Enhancement innovation
Various others
Innovation by experimentation
Learning what does not work is as important as learning what works
Today’s low cost of experimentation enables finding by trying
For Agile, the bi-weekly Agile iterations provides a “firewall” that caps investment

Two Chasms You Must Cross
Six simultaneous dimensions of change:
The Software evolves
The Architecture evolves
The process evolves
The organization evolves
The deployment modus evolves
The customer and his problem evolve
Some of these dimensions are subject to strong inertia:
Routine
School of thought
Vested interests
Difference in the rhythm of change leads to two chasms:
Between Executive and Employees
Between R&D and the Business

Agenda

A Social Contract for Agile
“ Team, my overarching organizational objective is to preserve our team and its institutional knowledge for our corporation and its customers for years to come
We will achieve this goal by enhancing our software engineering prowess to the level that the resultant benefits will outweigh the repercussions of the current financial crisis
The state of the Agile art should enable us to attain hyper-productivity
In the event that we fail to accomplish hyper-productivity and our assignments fade away, you will find the Agile skills you developed much in demand in the market
Whether you will or will not be with the company in the future, I acknowledge your need to develop professionally as an Agile practitioner and commit to invest in your education/training”

(*) Loose definition - social contract: "Implied agreements by which people form a community and maintain relatively stable system of institutions, pattern of interactions and customs."

Qualitative Assessment of Success
“ Working with the agile teams at BMC those last two years were some of the most rewarding in my career because of the sense of purpose, direction and camaraderie that the process instilled in everyone.”
[R&D Architect]
“ If we used waterfall on BPM, we would still be in development. We would likely be cutting features right and left to try to bring the date back in. Changes requested along the way by the solutions teams would have been pushed back on rather than embraced. ”
[R&D Director]
“ The change you brought to BMC with Agile is the single largest change to the development model that I have ever witnessed in my almost 20 years at BMC."
[R&D Director]

Quantitative Measurement of Productivity by QSMA © Copyright 1/11/2009 BMC Software, Inc. 0 2 4 6 8 10 12 14 16 18 20 22 24 Business Information Command and Control Process Control Scientific System Telecommunications Engineering Avionics Microcode Real Time Real Time 28 26

Agenda

A Chasm of Biblical Proportions

Agile lessons for business innovation
Imperative need for continuous innovation
Neither internal nor external innovation begin with understanding of customer
Start with stories & design goals, not an elaborate business plan
“ Agile” as a set of methodologies allows non-technical innovators to access the way techies build “stuff”
Iteratively discover the customer and define the product in tandem
Contained cost of experimentation
The Lean Startup Steve Blank and Eric Ries

A Modus for our Time
Classic model: Two propeller heads with a neat new toy approach VC for money and business maturity
New model: business person has entrepreneurial idea that happens to be expressed via a Web application
The new tech entrepreneur/intrepreneur is less likely to be able to build their own technology
Agile is the only development methodology that can fulfill the needs of the prevailing turbulent environment

Closing thoughts: A New Venture Model
Most innovative and successful businesses are holistic re-combinations of proven patterns in a novel way
Starting with a cool widget makes the outcome essentially random
Discontinuous innovation puts the business at risk
Instead:
Start with an idea to create value in a market & a business champion
Start with business design conversations
Marry to development resources, bring them into the conversation
Iterate through the process of building the parts of the business and figuring out how they fit together.
Repeat at portfolio level: build an self-reinforcing ecosystem, not a one-off firm/project

Contact Information
Israel Gat
Cutter Consortium
http://theagileexecutive.com/
512-826-3210
[email_address]

Reconfiguring the Business

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